Inheritance Tax/ Tax Experts

[HowlingGale]

Are there any knowledgeable people out there who know the taxation system, specifically inheritance tax?

Got a letter yesterday from HMRC's Worldwide Disclosure Facility stating that they want me to ensure that my tax affairs are up-to-date and to declare any income from overseas assets. I was a bit taken aback as I don't have enough money to have overseas assets. (I'm assuming all the multi-millionaire tax dodgers are getting the same letters). I had a feeling it was about my Aunt's estate back in 2020. She lived in the USA and that's the last time I received money from overseas.

I called the number on the letter and to say it was most unhelpful is an understatement. It turns out it was about the payment received from my Aunt's estate in 2020. The guy on the line basically said that I had to consult an independent financial advisor to ensure I'm disclosing the money correctly and then submit the response letter to HMRC. He said that we need to ensure it's inheritance and not some sort of trust. It is absolutely inheritance and not a trust.

He said the gov website should give me information but he couldn't give me thresholds on what I could get before paying tax. I can see inheritance tax sits at 325k, I think or thereabouts. But does this include inheritance from overseas? Just for reference the amount I inherited from my Aunt was a little over £5k. It's really irked me because 1. I really don't have a clue about tax and I really don't want to pay an IFA if I don't need to pay any tax anyway and 2. I feel I'm the little guy getting screwed over. I'm not trying to dodge paying tax if I'm due to pay it but I genuinely thought this fell under inheritance tax, but maybe it's not. The guy couldn't tell me.

Is anyone able to tell me if I may be liable to pay tax on the inherited money before the bailiffs come knocking?

Thanks.

 

[Swango1980]

I'm not an expert, and I'm sure all of the above is legitimate. But, I recall in the last month people on local facebook groups posting HMRC letters they have received (that look completely legit), and have been confirmed as scams by HMRC themselves. So they've taken to facebook to warn others.

The received letters, as I said, look very real. It includes the proper website address and official links. The reference number was in the correct format. However, it is the phone number that was the scam

 

[HowlingGale]

Thanks but definitely legit. Googled the number first to make sure it wasn't a scam. It was for the Offshore Disclosure facility.

 

[Old Colner]

I can't answer your question unfortunately, but wish you good luck dealing with HMRC, I would advise you to not worry about it and don't loose any sleep over it, look into it as you are doing and find the correct information you require and as they say write the letter to confirm your findings, if you have submitted incorrectly it will be sorted and any error was not intentional.

 

[jim8flog]

I am not an IFA but I do/did know that should keep a record of all financial affairs for a period of 6 years (unless it has changed).

My question would be "did you keep a coy of the correspondence relating to the inheritance and is it very specific about what the money was from?"

If yes just send the IR a copy of the correspondence.

 

[HowlingGale]

I can't answer your question unfortunately, but wish you good luck dealing with HMRC, I would advise you to not worry about it and don't loose any sleep over it, look into it as you are doing and find the correct information you require and as they say write the letter to confirm your findings, if you have submitted incorrectly it will be sorted and any error was not intentional.

Thanks. I'm getting the impression they're not overly helpful. Probably in the hope that you cave and pay something.

I am not an IFA but I do/did know that should keep a record of all financial affairs for a period of 6 years (unless it has changed).

My question would be "did you keep a coy of the correspondence relating to the inheritance and is it very specific about what the money was from?"

If yes just send the IR a copy of the correspondence.

That's a great idea. I didn't even think of that. I have some of the correspondence and I've had a look through it. It doesn't stipulate amounts as I do remember everything was very fluid as the estate was still paying for things and we were getting a split of what was left. Apart from formal declarations and legal forms etc. everything was done over the phone. Maybe what I have, paperwork saying I'm a named beneficiary will suffice. They can only say no. Many thanks.

 

[Pants]

Firstly. I admit that I know virtually nothing about internation tax affairs - however...

I would think that HMRC's interest is that if the income that you received was from a trust then that could potentially be taxable in the UK. If it was a straight 1 off inheritance payment then surely it would have been made from the estate after any inheritance tax had been taken. Show that it was an inheritance and I would think that that will be OK.

Hmm. I have been known to be wrong on occasions though

 

[Canary_Yellow]

Thanks. I'm getting the impression they're not overly helpful. Probably in the hope that you cave and pay something.




That's a great idea. I didn't even think of that. I have some of the correspondence and I've had a look through it. It doesn't stipulate amounts as I do remember everything was very fluid as the estate was still paying for things and we were getting a split of what was left. Apart from formal declarations and legal forms etc. everything was done over the phone. Maybe what I have, paperwork saying I'm a named beneficiary will suffice. They can only say no. Many thanks.

I'm not an inheritance tax expert, but I am a tax expert and used to dealing with HMRC.

The reason you're finding them unhelpful is that the UK operates on a self assessment basis, therefore it's your duty to get your tax affairs right (as opposed to their duty to tell you the answer). I realise that's not much good to you in this situation, but thought I'd explain that anyway.

Don't be intimidated by their letter, first, be sure what you're obligated to do. Is there even anything for you to disclose? If you're already compliant, can you ignore the letter? Is it simply an "invitation" to use their "Worldwide disclosure facility" if there's something you haven't declared that you should have? In which case no action needed if you've already done what you need to. If you do need to write back to them, don't worry about doing so, simply set out the facts very clearly. Tell them the amount, where it was from etc.. but nothing more than you need to.

From what you're saying, there's nothing to hide here.

Send me a DM if you want any further help

EDIT: I've done a bit of googling......

First things first, inheritance tax is payable by the estate of the person that's died, and so the £325k limit is on the value of your aunt's estate rather than what you received.

Whether inheritance tax was due or not would depend on whether your Aunt was UK domiciled at the time of her death and / or if she had assets in the UK. But in any case, that should all have been dealt with by the executor of her will, with payments being made out of the residual post tax balance.

You could ask the executor of the will to confirm that UK inheritance tax was paid (if applicable). I don't think you should need to though, if you need to write to HMRC at all (see above comment on the nature of the letter), write to them and give them the facts.

 

[HowlingGale]

Firstly. I admit that I know virtually nothing about internation tax affairs - however...

I would think that HMRC's interest is that if the income that you received was from a trust then that could potentially be taxable in the UK. If it was a straight 1 off inheritance payment then surely it would have been made from the estate after any inheritance tax had been taken. Show that it was an inheritance and I would think that that will be OK.

Hmm. I have been known to be wrong on occasions though

Cheers. I've been doing a bit of digging and that certainly seems to be the case. The advice from Jim earlier to send them some correspondence. There is a 'Forum' on the gov website where people pose questions to HMRC and one of their agents respond. It seems I'm not that unusual and consensus is that I need not worry as I'm not liable for anything.

I'm not an inheritance tax expert, but I am a tax expert and used to dealing with HMRC.

The reason you're finding them unhelpful is that the UK operates on a self assessment basis, therefore it's your duty to get your tax affairs right (as opposed to their duty to tell you the answer). I realise that's not much good to you in this situation, but thought I'd explain that anyway.

Don't be intimidated by their letter, first, be sure what you're obligated to do. Is there even anything for you to disclose? If you're already compliant, can you ignore the letter? Is it simply an "invitation" to use their "Worldwide disclosure facility" if there's something you haven't declared that you should have? In which case no action needed if you've already done what you need to. If you do need to write back to them, don't worry about doing so, simply set out the facts very clearly. Tell them the amount, where it was from etc.. but nothing more than you need to.

From what you're saying, there's nothing to hide here.

Send me a DM if you want any further help

EDIT: I've done a bit of googling......

First things first, inheritance tax is payable by the estate of the person that's died, and so the £325k limit is on the value of your aunt's estate rather than what you received.

Whether inheritance tax was due or not would depend on whether your Aunt was UK domiciled at the time of her death and / or if she had assets in the UK. But in any case, that should all have been dealt with by the executor of her will, with payments being made out of the residual post tax balance.

You could ask the executor of the will to confirm that UK inheritance tax was paid (if applicable). I don't think you should need to though, if you need to write to HMRC at all (see above comment on the nature of the letter), write to them and give them the facts.

Thanks for the effort. That makes sense to me now. I'm a bit ignorant to be honest. I've been PAYE all of my working life so never really bothered with tax. It just gets taken from my top line every month. I do need to respond to them stating if I need to bring my tax affairs up-to-date or if it's not liable to taxation due to personal allowances etc.

My Aunt was a full citizen of the USA. That whole side of the family is Canadian/American so they had no interests or assets in the UK at all. Unfortunately there is no executor or lawyer. She was a frugal old thing and paying someone to help out would have been an alien concept. As a result we had a heck of a time extracting the money in the first place. I've had a look online and it would seem that all taxes should have been paid at the US end. I'm really not sure how it all worked. It was in the middle of COVID, I was on the phone to Texas on a weekly basis and I don't know what taxes were paid in the US out of the estate.

I can't ignore the letter as they want a response by the 29th June. I think I'll try writing to them and giving them all the details including the correspondence from the insurance company. I can see what comes from that and whether they want to take it further. That way I've given them all the info I have, to show willing, and if they send me to jail it might reduce the sentence a bit .

 

[Canary_Yellow]

Cheers. I've been doing a bit of digging and that certainly seems to be the case. The advice from Jim earlier to send them some correspondence. There is a 'Forum' on the gov website where people pose questions to HMRC and one of their agents respond. It seems I'm not that unusual and consensus is that I need not worry as I'm not liable for anything.



Thanks for the effort. That makes sense to me now. I'm a bit ignorant to be honest. I've been PAYE all of my working life so never really bothered with tax. It just gets taken from my top line every month. I do need to respond to them stating if I need to bring my tax affairs up-to-date or if it's not liable to taxation due to personal allowances etc.

My Aunt was a full citizen of the USA. That whole side of the family is Canadian/American so they had no interests or assets in the UK at all. Unfortunately there is no executor or lawyer. She was a frugal old thing and paying someone to help out would have been an alien concept. As a result we had a heck of a time extracting the money in the first place. I've had a look online and it would seem that all taxes should have been paid at the US end. I'm really not sure how it all worked. It was in the middle of COVID, I was on the phone to Texas on a weekly basis and I don't know what taxes were paid in the US out of the estate.

I can't ignore the letter as they want a response by the 29th June. I think I'll try writing to them and giving them all the details including the correspondence from the insurance company. I can see what comes from that and whether they want to take it further. That way I've given them all the info I have, to show willing, and if they send me to jail it might reduce the sentence a bit .

Yep - sounds sensible. Just stick to the facts and that should be that. If they want any further clarifications, they'll ask.